Dubai: Israel business's gateway to the Middle East and beyond - comment

The time is ripe for forward-looking Israeli start-ups to seek new markets for vertical growth, exports and expansion

Since signing the historic Abraham Accords in 2020, we have seen a dramatic increase in bilateral trade between Israel and the UAE. We expect this new era of cooperation to see trade soaring to US$10 billion by 2027.

The Middle East has long been renowned for trade, for innovation and as a center for global deals.

Intra-nation trade reached  $2.56 billion in 2022 – despite the pandemic – up from $1.19b. in 2021. That year also saw Dubai imports from Israel almost double, and Dubai re-exports to Israel grow significantly.

Israel is known across the world as “The start-up nation”, a well-deserved title considering it now has around 100 ‘unicorn’ start-ups , with 42 new unicorns in 2021 and 23 in 2022. While innovation is firmly local, we know the vision of Israeli start-ups is global, with new market growth built into their business plans from the outset.

How can Israeli start-ups achieve their global vision?

While venture capital funding in Israel increased gradually toward 2021 – reaching a record of some $10 billion – that figure saw a dramatic decline in 2022 as global economic woes took their toll on venture capitalist sentiment. Following the signing of the Abraham Accords, there’s been a marked downturn in US-led investment, driven by rising interest rates and global geopolitical tensions.

Dubai has a powerful reputation as a laissez-faire market, welcoming start-ups with a host of attractive offers, from easy set-up, 100% foreign ownership, low-cost visas and a favorable tax regime to government-backed business support and networking facilities.

The UAE bucks volatile international trends in terms of economic performance and outlook. At the time of writing, the UAE’s GDP is expected to record around 6% growth in 2022, up from 3.8% in 2021, according to the International Monetary Fund. Furthermore, the UAE is ranked first in the region for ‘starting a business’ by the World Bank’s Ease of Doing Business 2020, and 16th globally. More than 35% of MENA start-ups are based in the UAE, taking advantage of the robust economic growth climate. 

According to Dubai FDI [Foreign Direct Investment] Monitor, foreign investment in the first half of 2022 grew by nearly 15% over the same period last year, making Dubai the world’s premier FDI hub. In 2020 and 2021, the UAE accounted for over 30% of FDI inflow into the MENA region. According to the UNCTAD World Investment Report 2022, the UAE also ranks first for FDI inflows in West Asian countries, with an FDI growth rate of 4%.

Clearly, the time is ripe for forward-looking Israeli start-ups to seek new markets for vertical growth, exports and expansion.

Smart Israeli firms are already taking full advantage of Dubai’s unique position as a leading global business hub, and a gateway to the MENASA region – that is, Middle East, North Africa and South Asia. In addition, the May 2022 signing of a Comprehensive Economic Partnership Agreement (CEPA) - and removing tariffs on 96% of goods will certainly encourage and shore up bilateral growth.

Last year’s launch of Dubai Global sees the emirate underlining its ambitious goal of being one of the best business hubs globally – by opening up 30 new markets and establishing 50 integrated commercial representative offices for Dubai in five continents during the next few years– including Israel - and attracting thousands of investors.

There are already more than 1,000 Israeli businesses operating in the UAE, and dozens of new direct flights between the two nations – supported by visa-free travel. With a diverse and mature international consumer base, today, Dubai is an ideal location to test and launch operations across the Middle East, Africa, and South Asia.

We welcome Israeli start-ups looking to bolster their regional presence and expand globally. With seemingly limitless opportunities for trade across a variety of sectors, from agritech and water security to retail, chemical and food, let us embrace this new era of free, fair and reciprocal trade enabled by the Abraham Accords.

The writer is vice president – International Relations, Dubai Chambers